Awareness to action: connecting employees to the bottom line.

Over the years, internal communicators have worked hard to create strategic communication programs. In employee communication circles, "strategic" is the buzzword. So much so that it seems people's decision to attend a communication conference depends on how many times the word strategic appears in a conference brochure. That doesn't mean a focus on strategic communication is no longer valid. Communicators still have a long way to go to align communication with the strategies and objectives of the business.

But today, simply being strategic is no longer good enough.

In its 2003/2004 Communication ROI Study[TM], Watson Wyatt Worldwide found that highly effective communicators go well beyond simply being strategic. A major contributor to their success is the ability to create internal communication programs that drive changes in behavior--moving people from awareness to action, as shown in the hierarchy of effective communication (see Figure 1 on page 25). It's this success at the behavioral level that delivers the most significant increase in shareholder value.

The Watson Wyatt study offers valuable information for internal communicators. Effective communication can contribute to a 29.5 percent increase in shareholder value, But not all communication is equal. The study identifies nine characteristics that determine effective communication and estimates the impact these programs have on generating surplus market value for their organizations. It also identifies actions that organizations can take to enhance shareholder returns by changing communication methods across the organization.

ACHIEVING QUANTIFIABLE RESULTS

It comes in all shapes and sizes--the awareness-to-action model. Communicators may call it by another name or use other terminology, but the concept is the same. The most effective communicators develop their programs by building employee awareness and understanding, gaining acceptance and commitment and, finally, promoting--or reinforcing the right behaviors.

The Watson Wyatt study found that the ability to produce the right communication behaviors strongly correlates to substantial bottom-line impact. Companies with the most effective employee communication programs provided a 26 percent total return to shareholders (TRS) from 1998 to 2002, compared to a 15 percent TRS experienced by firms that communicate least effectively. Moreover, a significant improvement in communication effectiveness is associated with a nearly 30 percent increase in market value.

The study also substantiates the claim that effective communication reduces employee turnover. Turnover rates in organizations that communicate most effectively are 50 percent below those of less-effective communicators. Translation: lower recruiting and training costs and higher profitability.

CHANGING EMPLOYEE BEHAVIOR

The study identified clearly discernible actions that successful organizations take to reach the pinnacle of effective communication. They start with a well-defined communication structure and develop communication programs that align with business strategy. Unlike their counterparts, though, they also focus on changing behaviors by

* creating a line of sight between employees and customers and

* driving changes in managerial and supervisor behavior.

CREATING A LINE OF SIGHT

A clear line of sight means that employees understand the big picture. They see how their actions move the organization closer to meeting its goals. Managers communicate openly with employees about matters that affect them and engage them in solving business problems,

Line of sight encourages employee feedback--both positive and negative that guides the organization in making continuous improvements or initiating major changes. Employees in this type of environment are more likely to take the appropriate action without direction because they understand how their actions affect business results, The employees' ability to respond swiftly to changing circumstances gives the organization greater agility to adapt to dynamic market conditions.

Organizations with highly effective communication are innovative in their approaches to developing a line of sight, Merck & Co, Inc., for example, believes that communicators must interpret fundamental business issues and help employees become more business savvy. At Watson Wyatt, the communication practice division developed "Biz U," a web site that focuses on helping consultants interpret financial spreadsheets, reading The Wall Street Journal and gathering critical information from annual reports. Walgreens takes annual reports to a new level with its annual report to employees. The report helps connect employees to the business in a way that matters to them, and it's written in a language they can understand.

Creating business-savvy employees through web sites such as Biz U or publications such as annual reports to employees are smart, effective ways for communicators to create a line of sight,

DRIVING MANAGERIAL BEHAVIOR

Everyday interaction between employees and managers has a huge impact on employee attitudes and behavior. No matter how sound the formal communication process, it isn't good enough unless managers support main messages through their actions. That makes driving supervisory and managerial behavior crucial to effective communication.

Organizations with high communication effectiveness leverage the employee/manager relationship to enhance formal communication processes. Leadership clearly articulates its vision and ties communication initiatives to business objectives. Managers receive information in advance so they have time to absorb and understand it before presenting it to employees.

This emphasis on managerial behavior pays off in several ways. These organizations are more likely to report that their managers:

* understand what is expected of them

* consistently display the appropriate behaviors

* do a better job of supporting the leadership's vision through their actions and enthusiastic acceptance of new approaches to work

* are more likely to develop a participatory style and to give employees recognition.

Faced with an increasing need to improve the communication skills of their leadership, the IT division of Baxter Healthcare created a remote-access training program to develop the communication skills of its top leaders. This global program--built around training, application, reinforcement and measurement--created IT leaders who aren't afraid to communicate with employees, ask for feedback and involve employees in decision making.

MEASURING THE IMPACT

Success at the behavioral level is the starting point, not the end. Organizations with high communication effectiveness constantly measure and refine their programs. Once again, the Watson Wyatt study provides valuable insight:

* Organizations that use hard measures to gauge the impact of their communication efforts have higher returns to shareholders than those that use only soft measures, such as employee surveys.

* Organizations that rely on soft measures may actually see a negative return.

The lesson here is that communicators should create hard performance measures and assessment techniques that clearly demonstrate how a program or campaign contributes to achieving corporate goals. Hard measures include communication audits and the objective evaluation of employee behavior and of the impact communication has on company performance. Communicators also need to rely less on measuring employee satisfaction or preference.

Although many highly effective communicators do both soft and hard measures--measuring employee needs and motivators, while assessing the impact of communication on the bottom line--less effective organizations measure only employee satisfaction (if they measure at all).

A LESSON FROM MARKETING, ADVERTISING AND POLITICS

The emphasis on strategy in recent years has been an important and necessary step in improving communication. Unfortunately, in many organizations, communication has become so mired in the jargon of business strategy that it is stilted and brittle--to the point that nobody wants to read it.

Communicators can make major strides toward winning back their audiences by applying techniques that marketing and advertising professionals and political campaign managers have used successfully for years. Marketing, advertising and politics are all about connecting with consumers or voters in a way that causes them to take the desired action. Successful campaigns are built with a thorough understanding of audience attitudes, perceptions and preferences, And successful campaigns persuade people to act in the desired way.

Internal communicators need to develop this same thorough understanding of employees if they are going to win back employee hearts and minds. That means making a transformation from "communicator" to "employee expert." It means getting rid of communication that reads like a dry spreadsheet and presenting corporate vision, strategy and objectives in a way that captures the imagination and raises the level of passion and commitment.

REACHING FOR THE STARS

The importance of building a foundation and linking communication programs to business strategy will never go away. Effective communication requires developing a strong foundation by creating formal processes, leveraging technology, integrating total rewards and using employee feedback. It also requires thinking and acting strategically. To reach world-class status, though, communicators have to take the next big step: changing behavior by helping managers become better communicators and change agents, and conveying to employees how what they do each day makes a difference to the overall success of the organization. Making that connection to employees and managers delivers positive results to the bottom line.

SURVEY METHODS

Watson Wyatt Worldwide asked participants in the "Connecting Organizational Communication to Financial Performance: 2003/2004 Communication ROI Study[TM]" to rate their organization's overall effectiveness in communication against the dimensions that constitute effective communication.

In the first stage, research analysts employed a multivariate regression analysis, regressing organization performance on the score for communication effectiveness and other control variables to estimate the magnitude of the effect these programs have on generating surplus market value for the organization. Next, analysts determined which communication programs and practices are associated with higher communication effectiveness. Finally, they performed statistical analyses to determine the relation of the practices to the communication effectiveness score, and to present data on the differences between companies based on this score.

To order a copy of the 2003/2004 Communication ROI Study or to download a PDF of the report, visit www.watsonwyatt.com.

TEN ACTIONS TO TAKE NOW TO IMPROVE COMMUNICATION EFFECTIVENESS

1. Win leaders' support by showing them how effective communication can contribute to business success.

2. Do a sanity check on the foundation of your communication program--processes, rewards, feedback and technology. Understand how much time employees actually have every day to participate in communication activities.

3. Test your own knowledge and understanding of the top business goals of leadership.

4. Directly tie your communication strategy to those goals.

5. Spend time reviewing your current communication pieces to see if they inspire you or leave you cold.

6. Learn from successful marketing, advertising and political campaigns to make your communication more compelling.

7. Go beyond employee opinion surveys; develop your own communication research system.

8. Create a baseline to understand how "connected" employees are to the business today, that is, how well they understand their jobs and the impact they have on business success.

9. Use hard measures to determine the impact of campaigns on employee and managerial behavior.

10. Continuously refine your communication program.

Peter Vogt is the San Francisco office leader and Asia-Pacific regional leader for Watson Wyatt Worldwide's communication practice and is a co-author of "Connecting Organizational Communication to Financial Performance: 2003/2004 Communication ROI Study[TM]."

He can be reached at [e-mail].